The following article is by Michael Gwilliam, Partner, Plexus for Travel Law Today 4th ed. which can be downloaded from ABTA's Member zone and read here.
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Claims Handling in Travel – 27 February (London)
Tour operators offering all-inclusive package holidays have been battling a problem which has been much discussed. Over the last three years, there has been a reported increase in compensation claims for gastric illness of over 500% whilst over the same period, the actual number of sickness cases reported in resorts has either remained stable or gone down. This is a phenomenon only associated with UK holidaymakers and appears largely to be as a result of claims management companies (CMCs) encouraging holidaymakers to submit fraudulent or exaggerated claims and coaching people on what to say to make a claim. The result has been stark. One hotel association in Mallorca estimates that the cost to their members was £42 million last year alone. Hoteliers in Spain and Turkey have made noises about having to stop offering all-inclusive package to British tourists.
But has the tide now started to turn? If so, for what reason?
In July of this year, the Government launched a crackdown on false claims with Justice Secretary David Lidington announcing boldly: “Our message to those who make false holiday sickness claims is clear – your actions are damaging and will not be tolerated. We are addressing this issue, and will continue to explore further steps we can take. This Government is absolutely determined to tackle the compensation culture which has penalised the honest majority for too long.” A system under which only modest fixed costs are awarded to successful claimants already exists for most personal injury claims in England and Wales, but a loophole has been exploited in foreign holiday claims
where costs remain uncontrolled.
To prevent this, ministers have asked the Civil Procedure Rule Committee, which is responsible for setting rules on court procedures, urgently to look at the rules governing the costs of holiday claims. As a result of these proposed changes, fixed recoverable costs may be extended to cover claims arising abroad, closing the loophole and meaning that pay-outs for tour operators will be subject to stricter controls. This is very welcome news – and has been hard earned by an industry previously struggling under a tide of illness claims but which has come out fighting.
However, it is only one part of a much bigger picture. Well coordinated and well publicised campaigns including ABTA’s “Stop Sickness Scams” and Travel Weekly’s “Fight Fake Claims” have doggedly gained traction and been picked up by the popular press. Significantly too, there appears to have been an unconscious shift in the attitude of judges hearing these claims in courts nationwide. Whereas before it seemed to many that a claimant willing to swear on oath that they had been ill as a result of dodgy food served in resort some years ago was able too easily to overcome the burden of proof, these claims appear now to be subject to more rigorous scrutiny. Assisted by the comments on causation of Lord Justice Burnett in the Court of Appeal case of Wood v TUI that “proving an episode of this sort was caused by food which was unft is far from easy. It would not be enough to invite a court to draw an inference from the fact that someone was sick”, it is clear in practice that many fewer of these claims are reaching the required standard of evidence and are being dismissed or discontinued.
How travel companies are fighting back
Claimants in the past could have been forgiven for believing that they had everything to gain but really nothing to lose in pushing their claims to court. No longer. Increasingly, tour operators successfully defending cases to trial are seeking a specifc ruling that the claim was “fundamentally dishonest”. This is a significant development as it allows them to enforce an order for wasted legal costs against a dishonest customer who will be left facing a bill of many thousands of pounds. As the Solicitors Regulation Authority (SRA) itself clearly spelled out to the legal profession in a strongly worded warning this month, “solicitors do not help clients by bringing claims that have not been rigorously investigated, including consideration of adverse evidence”, “solicitors must… properly assess all of the evidence before submitting claims” and “lawyers should not bring cases, or continue with them, where there is a serious concern about the honesty or reliability of the evidence.”
However, the story does not end there. Part and parcel of the industry’s campaign has been to educate the travelling public about the full consequences of fraud. Now they should be in no doubt that submitting a fraudulent claim is a criminal offence in the UK and could result in a criminal record and/or a financial penalty, which has recently happened when a couple were jailed in October 2017 for attempting to claim £20,000 in damages against Thomas Cook. Pursuing a fraudulent claim may also be illegal in the country where the holiday was taken.
It is reported that the SRA is currently investigating a number of law firms it suspects of having potentially improper links with CMCs over holiday sickness claims. In turn, the Claims Management Regulator has already stripped the licence from one CMC found to have encouraged holiday-goers to fabricate or embellish symptoms of gastric illness to get compensation. Evidence showed the firm had used deceptive sales scripts and had exaggerated expected pay-outs to entice consumers.
Keeping the momentum
It is undoubtedly true that there have always been claims for gastric illness and I am sure that will continue to be the case. I dare say that a number of them will even be genuine. However, there are encouraging signs that the unprecedented, unsustainable and, literally, unbelievable tide of less persuasive claims which has been seen over recent years is beginning to recede. That is not to say that the problem has already been solved but a good start has certainly been made and must be maintained. This resolute industry, unwilling to sit silently by, should be proud of the progress made to date in addressing and rebalancing this extraordinary onslaught.